In health care, the term ‘Payer’ generally refers to people or bodies other than the patient that finance or refund the cost of medicinal products and health services. Payers in the health care industry are organizations — such as health plan providers, Medicare, and Medicaid — that set service rates, collect payments, process claims, and pay provider claims. The importance of the Payer has increased in recent years. The main objective of the Payer is to ensure that they deliver the best possible health outcomes from their budget. Payers can be broadly categorized into three levels within a country: National, Regional and Local. Each category focuses on different aspects of a treatment’s value during their decision-making process.

Government programs such as Medicare and Medicaid set amount they will pay to health care providers. These are typically much less than the billed charge. Hospitals have no ability to negotiate the reimbursement rates for government-paid services. While rising health care costs are the ultimate issue for patients, providers, and payers alike, payers deal with other issues, including:

 

 

All of these issues present unique problems for payers and, ultimately, the rest of the health care industry. Governments have limited healthcare budgets resulting in insufficient resources to fund all their population’s healthcare wants and needs. It is, therefore, the role of the Payers to make informed, evidence-based decisions on which treatments to fund.